RBI announces Floating Rate Savings Bonds interest rate for January-June 2026; check details

The interest rate on the Floating Rate Savings Bonds, 2020 (Taxable) for the period January 1, 2026 to June 30, 2026, and payable on July 1, 2026, remains unchanged at 8.05%, the Reserve Bank of India (RBI) said on Thursday, January 1, 2026.

“...the coupon rate on FRSB 2020 (T) for the period January 01, 2026, to June 30, 2026 and payable on July 1, 2026 remains at 8.05% (7.70%+0.35%), unchanged from the previous half-year,” the RBI said in a release.

How is the rate set?

“In terms of Para 13 (ii) of Government of India Notification F.No.4(10)- B(W&M)/2020 dated June 26, 2020 on Floating Rate Savings Bonds, 2020 (Taxable)- FRSB 2020 (T), the coupon/interest rate of the bond would be reset half yearly, starting with January 01, 2021 and the coupon/interest rate will be set at a spread of (+) 35 bps over the prevailing National Savings Certificate (NSC) rate,” according to the RBI’s release.

Interest rate on FRSB 2020 (T): NSC rate + 0.35%

Thus, the interest on this bond is variable, as it adjusts with the NSC rate. This ensures that the investors earn in line with the market changes.

What is FRSB 2020 (T)?

Floating Rate Savings Bond, 2020 (Taxable) is a Government of India investment scheme launched in July 2020, offering a variable interest rate linked to the National Savings Certificate (NSC) rate plus a spread (of 35 bps). With a tenure of 7 years, the scheme provides stable returns to resident Indians and HUFs, and has no upper limit on investment.

The minimum investment is ₹1,000, and interest payments are made twice a year on January 1 and July 1. Premature exits are allowed for senior citizens (above the age of 60) with penalties.

The interest earned from investing in these bonds is taxable according to individual slab rates.

What is NSC?

The National Savings Certificate (NSC) is a fixed-income investment scheme backed by the central government, offered through post offices. The NSC has a tenure of 5 years, and the interest rate compounds annually. It offers a fixed interest rate, with tax benefits under Section 80C.

As the FRSB 2020 (T) is linked to the NSC, it offers investors a chance to earn more by protecting against inflation. However, it's important to remember that these bonds aren’t transferable and cannot be traded in the secondary market. Additionally, the interest rate cannot be compounded like the NSC, and the rate may also fall if the benchmark NSC rates decline.